The operations of China’s State-owned Enterprises (SOEs) are the subject of much controversy in Canada, particularly in light of the Federal government’s recently announced decision to block CCC International Holding’s acquisition of Aecon. Chinese SOEs have operated in Canada for decades, yet knowledge of these enterprises is limited. Concerns surrounding unfair SOE competition practices, opaque governance, or alleged threats to national security, perceived or real, are heavily featured in media, political and public discourse, particularly with respect to negotiations for a potential free trade agreement (FTA) with China.

The two papers provide a body of material on Chinese SOEs and how these firms operate in an effort to build a viable, balanced and more diversified economic strategy for Alberta in China. Such a strategy would be one that allows Alberta to take advantage of significant economic opportunities in in the Chinese market, while ensuring care and caution is employed, and that issues of access and fair competition are suitably addressed.

The first paper, “State-owned Enterprises in the Chinese Economy Today: Role, Reform and Evolution”, provides background on the current status of SOEs in the Chinese state, domestic economy, and international trade and investment more generally. It surveys various phases of “reform” or realignment of SOEs over the past 30 years since China’s “opening” – the real progress made, the unfinished business and the occasional steps backward. The paper finds that, counter to popular belief, SOEs that have in fact become less dominant in China’s national economy, and most major SOEs have become more modern and commercial in their orientation. However, the management styles of SOEs remain distinct from Canadian firms, in the sense that SOEs do not always seek to be profit-maximizing.

The second paper, “Chinese State-owned Enterprises in an Alberta-China Strategy: Role, Opportunities, and Challenges with special reference to a Potential Canada – China Free Trade Agreement” more closely examines the behavior of SOEs as it relates to the interests to and capacities of Alberta. The SOEs assessed in this paper are primarily those operating in sectors of principal interest to Alberta, whether as investors, financiers, or technology partners, as well as direct markets or potential supply chain allies and intermediaries for Albertan firms. Sectors of special potential are examined and issues of managing promotional activity effectively and addressing questions of access or those of reciprocity, and notably treatment of Canadian/Albertan businesses in China.

It is public opinion in Canada that will facilitate, or otherwise the FTA negotiations to commence, to proceed, and to conclude successfully. It is essential that public perceptions surrounding SOEs reflect an up-to-date understanding of reforms and changes within the Chinese economy, as well as the evolution of SOE management and operations.